What happens to my Insurance with QSuper when I am made redundant?

If you have recently made redundant or are in the process of being made redundant from the Queensland government some of the personal insurance you have within QSuper will end along with your employment.

Most people realise that their income protection will probably stop given their income no longer needs protecting. However it appears that life and total and permanent disability insurance within QSuper may also end at the time of redundancy. The below two paragraphs come straight from QSuper's website. http://qsuper.qld.gov.au/members/super/earlyaccess/redundancy-insurance.aspx

If you leave employment with the Queensland Government your death and total and permanent disability insurance cover will end, and premiums will cease to be deducted, four weeks after you finish employment with the Queensland Government or a related entity.

You may be able to maintain your current level of cover if, when you cease employment with the Queensland Government or a related entity, you apply to have a non-Queensland Government employer contribute to your QSuper account. This must be elected within 90 days of ceasing employment and an employer contribution must be received by QSuper into your account within 120 days of ceasing employment with the Queensland Government or a related entity.

So it would seem that if you become gainfully employed within a very short space of time you can elect for your new employer to make contributions to your superannuation account which will preserve your current insurance arrangements. I was incredibly surprised to find this out when reading through the QSuper website as most other industry funds allow insurance to be retained without the requirement for ongoing employer super contributions.

So what are the other options:

• You could rollover your QSuper benefits to another Industry style superannuation fund and take advantage of the automatic acceptance levels on the fund that will given you a certain amount of life and total and permanent disability cover. You should read the insurance guide and product disclosure statement of the fund and seek financial advice.

• You could roll it over to a public offer fund such as AMP, Colonial Fist State, MLC etc and take out insurance through them. However you will not be given an automatic acceptance of a certain level of cover and will need go through the full underwriting process. True life companies such a these generally have features that industry superannuation fund generally do not, such as terminal illness benefit on life cover. You will however need to use a financial planner to use these styles of funds.

• The third option is establish your own Self Managed Superannuation Fund and have the insurance owned by your own fund. One advantage to this scenario is that the premiums paid by your Superfund are tax deductible to your Superfund giving the fund a deduction that would otherwise go to an industry fund or public offer fund. You should speak to a financial planner about how to carry out this strategy as this is a complicated area.

• Take out life and total and permanent disability insurance outside of the superannuation environment and pay for the premiums from savings. This will very likely be the least affordable method given cash flow could be tight with the redundancy.

• Take the risk of not having insurance. Personally I think this is the least preferable option given that the time people require insurance the most is usually when they can afford it the least.

This is a brief summary of the options available. Changing your financial situation should not be taken lightly given the numerous rules and regulations that govern the financial industry. You should always read the product disclosure statements before making a financial decision and I encourage you to seek out financial advice from a fee for service style financial planning business that is not tied to a financial institution.

The information in this summary is general in nature and should not be taken as personal financial advice.